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Sorry, you are in almost everything wrong. Deficits are not really a problem. Currently, the lack of a deficit is the main reason, why the ECB set the interest
by tehabe 10y ago
Sorry, you are in almost everything wrong. Deficits are not really a problem. Currently, the lack of a deficit is the main reason, why the ECB set the interest rate to zero. Almost all European governments cut spending and remove money from the economy. The results are awful is most economies, except those which can export more than import. They live on the deficit of other countries.
BTW Germany is currently the country which suffers the most from the low interest rates of the ECB.
The problem is that countries like Greece, Spain, and Portugal are being forced to cut spending, which doesn't end their crisis but will prolong them and make everybody poorer in the process.
There is certainly a point in which the deficit is too high, but where this point is, is unknown. It is the same with inflation, a little bit inflation is good for an economy. It gives incentives to spent money and to invest now and don't wait for lower prices. But too high inflation will hurt an economy badly.
- atmosx 10y ago> Sorry, you are in almost everything wrong. Deficits are not really a problem. Currently, the lack of a deficit is the main reason, why the ECB set the interest rate to zero. Almost all European governments cut spending and remove money from the economy. The results are awful is most economies, except those which can export more than import. They live on the deficit of other countries. Maybe I didn't make my self clear: I didn't say that deficit is a problem per se. I argued that given the current design and status quo in the EU, any country that has a deficit vis-a-vis Germany should stay out of the common currency because inevitably, it will end up like Greece in the long run. I agree with most of what you said. Regarding Germany and the ECB, that's true but it's only a small part of the bigger picture.